Shares weaken as hopes for cut dashed

Australian stocks were weaker in early afternoon trade after a surprise fall in the nation’s jobless rate dampened hopes of another interest rate cut.

At 1.46pm AEDT on Thursday, the benchmark S&P/ASX200 was down 3 points, or 0.07 per cent, at 4517.4 points.

The Australian market reached its lows after data showed the nation’s unemployment rate fell to a three-month low of 5.2 per cent in November, down from 5.4 per cent in October.

Bell Direct equities analyst Julia Lee said the lower jobless rate, against the expectation of most economists, made traders less hopeful of an interest rate cut by the Reserve Bank of Australia when it meets again in February.

AFR
AFR

“I guess it hoses down expectations around further interest rate cuts so that’s a negative for the Australian sharemarket," she said.

“The labour force numbers were certainly a surprise. Since the numbers have come out, we’ve seen the market fall to the lows."

Australian shares were already weaker before the release of the labour force data, as bank stocks fell.

Banking shares had led the market to a stronger finish on Wednesday following this week’s RBA rate cut, but investors made profits on those gains by selling shares on Thursday.

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Westpac had lost 8.5 cents to $25.49 and ANZ had slipped 1 cent to $24.76.

NAB was the only big bank in positive territory, adding 7.5 cents to $24.38.

The big miners were stronger. BHP was up 28 cents at $34.57 and Rio Tinto was 44 cents higher at $59.79.

Shares in troubled broadcaster Ten Network remained in a trading halt as it announced an extra $35 million in cost cuts and a $230 million capital raising venture in response to its recent poor performance.